OMBUDSMAN Conchita Carpio Morales has affirmed the finding of probable cause against former Local Water Utilities Administration (LWUA) Prospero Pichay Jr. and 24 others, including Senator-elect Sherwin Gatchalian, in connection with the anomalous acquisition of the Express Savings Bank Inc. (ESBI) in 2009.
Aside from Pichay and Gatchalian, 23 others are indicted for three counts of violation of Section 3(e) of the Anti-Graft and Corrupt Practices Act, three counts of malversation, and violation of General Banking Law of 2000 and the Manual of Regulation for Banks.
ESBI is a local thrift bank based in Laguna, which was previously owned by the WELLEX Group Inc. of Gatchalian's family. The senator-elect himself in an executive of the company when the deal was brokered.
Also included in the charged sheet were former LWUA directors Eduardo Bangayan, Aurelio Puentevella, Enrique Senen Montilla III, Wilfredo Feleo, Daniel Landingin, and Arnaldo Espinas; WELLEX Group Inc. executives Dee Hua Gatchalian, William Gatchalian, Elvira Ting, Kenneth Gatchalian and Yolanda Dela Cruz.
Similar charges were also filed against Alay Buhay Party-list Representative Wes Gatchalian who is a former executive of Forum Pacific Inc. along with Peter Salud, Geronimo Velasco Jr., Rogelio Garcia, Lamberto Mercado, Jr., Evelyn dela Rosa, Arthur Ponsaran, and Joaquin Obieta; and ESBI executives George Chua, Gregorio Ipong, Generoso Tulagan, Wilfred Billena and Edita Bueno.
Investigation by the Ombudsman disclosed that ESBI deal was executed despite not having any approval from the Monetary Board as well as from the Department of Finance (DOF) and Office of the President and contrary to the legal advice of Office of the Government Corporate Counsel.
Finance Department said the deal is inconsistent with the ongoing rationalization and streamlining of the government corporate sector.
"In view of the bank's precarious financial standing at the time of the sale, the windfall received by herein private respondents must be deemed unwarranted benefit, advantage or preference," the resolution read.
Morales noted that the LWUA board approved the acquisition despite findings by a due diligence audit by a private firm that ESBI was insolvent after suffering substantial net losses and capital deficits for five straight years, from 2005 to 2009.
The LWUA board approved the transfer of agency funds to ESBI to increase the bank's authorized capital stock, of which P80 million was paid to the Gatchalians as the bank owners.
The Ombudsman's probe disclosed the government "effectively lost at least P80,003,070.51 in this questionable acquisition alone."
Morales noted that "the injury suffered by the government due to the respondents’ actions is undeniable" since the state was "deprived of the opportunity to use the illegally expended funds to instead fund the agency’s lawful projects." (Sunnex)